I Feel Good…
I’m feeling bullish about the Australian economy! Over the past 2 years, the economy is on the up, 2017 was a good year and I expect 2018 to be even better. I wanted to share with you some of the good news out there:
- Our 2.8% economic growth was the best in 15 months and it’s tipped to go higher.
- Employment has increased for 13 months straight.
- Unemployment is now at a 9-year low of 5.4%.
- Employment growth is the best in 12 years.
- Business conditions are at a decade-high.
- Business profits are at a record high and are up 26.9% over the year – the strongest gain in 15½ years.
- Profits are up 26.9% over the year – the strongest gain in 15½ years.
- In trend terms, dwelling approvals rose for the 9th month straight.
- Townhouse approvals are at a 20-year high.
- Building inflation rose by 1.4% in the September quarter. The annual rate of construction inflation rose from 2.4% to 3.8% – an 8 ½-year high.
- The fourth estimate of investment in 2017/18 is $108.9 billion and is 1.6% higher than the fourth estimate for 2016/17 – the best result for a fourth estimate reading in five years. The upgrade in investment between the first and fourth estimates is 34.1% – the biggest upgrade in 12 years.
- On debt servicing — the ratio of net income on foreign debt to exports of goods and services stood at 6% in the September quarter, holding near the best levels in 36 years.
- Engineering construction activity increased by 3.2 points to 11-year highs of 64.1, supported by strong infrastructure-related spending. Any reading above 50 signifies expansion or growth.
- Exports to China hit a record $102.29 billion in the year to October.
- Job ads rose for the fifth time in six months in November to 172,395 ads – a 6-year high. Job ads are up 12.1% on a year ago.
- The Internet Vacancy Index rose by 0.5% to 82.7 in October 2017 in trend terms, after increasing by an upwardly revised 0.6% in September. The index has now risen for 12 consecutive months - the first time since March 2011. The index has increased by 8.4% over the year.
- According to the Federal Chamber of Automotive Industries (FCAI), new motor vehicle sales totalled 101,365 in November, up 2.5% on a year ago – the highest for a November month on record.
- On our trade surplus — the rolling 12-month surplus rose from $18.9 billion to a record $20.1 billion. Exports to China hit a record $102.29 billion in the year to October.
- In the year to October, 56.9% of those aged 60-64 years and 12.7% of those aged 65 years and over were in the job market — both record highs.
- Over the year to September, the proportion of occupied seats on domestic flights hit a 5½-year high of 78.4%.
- Over the past year, a record 1,347,400 tourists came to Australia from China, up 12.6% over the year.
- The Commonwealth Bank Business Sales Indicator (BSI), a measure of economy-wide spending, rose by 0.6% in trend terms in October, after a 0.5% increase in September. Spending growth was the strongest in five months and above the long-term trend pace of 0.4%.
- The ANZ/Roy Morgan Consumer confidence rating is up over the long-term average
This has given even given the RBA, traditionally a conservative forecaster a prediction of a 3% growth to the economy. This is the historical number where employment grows and unemployment shrinks, so I hope they’re right. This, in turn, would put pressure on wages to rise which would bring a smile to all workers out there.
Adding to the positivity is the global economy growing in synchronisation, for the first time since 2007 every major economy in the world is growing. Now that the Trump tax cuts have been passed, you’d expect the US economy to live up to the forecasts of 4% growth next year.
Sure, things can go wrong, but have a look over the big news stories of the past few years – North Korea’s missile testing, ISIS and the problems in the Middle East, Britain deciding to leave the European Union, not to mention all the earthquakes, storms and droughts the economy has to deal with.
All these things happen, but the world’s economy keeps turning, growing and moving on.  I keep rocking up to work like everyone else so that I earn an income and have a better life. I feel good about our economy and the opportunities that exist in 2018.
Michael Farmer
Certified Financial Planner